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and pond should take into account the hours that petitioner and
other individuals worked on the reservoir and pond and whether
some portion of costs relating to the nonreservoir-unique
equipment should be allocated to the reservoir and pond and
therefore capitalized; (3) whether petitioner’s use of the Lear
jet for petitioner’s business- and investment-related travel was
excessive and unreasonable and therefore whether the expenses of
the Lear jet are deductible under sections 162 or 212; and
(4) whether any portion of petitioners’ residence in Orange,
California, qualifies as a home office under section 280A and
whether expenses relating thereto are deductible.
A number of other issues are also addressed, but various
adjustments that are still in dispute we do not address at this
time. We believe that the parties should be able to settle the
remaining issues.
OPINION
Timber Farm and Tahiti Property
To be treated as a trade or business under section 162 or
as a for-profit activity under section 212, taxpayers must be
engaged in the activity in question with the good faith
objective and actual purpose of making a profit. Jackson v.
Commissioner, 864 F.2d 1521, 1525 (10th Cir. 1989), affg. 86
T.C. 492 (1986); Dreicer v. Commissioner, 78 T.C. 642, 643-644
(1982), affd. without opinion 702 F.2d 1205 (D.C. Cir. 1983).
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